State asked to approve Exelon, Pepco merger

Officials say move will improve service, boost local economy

August 19, 2014|By Arthur Hirsch, The Baltimore Sun

Exelon, the parent of Baltimore Gas & Electric, filed its application Tuesday with the state to acquire Pepco Holdings, a move company officials say will improve service and boost the economies of Pepco's service areas in and around Washington, D.C., and on the Eastern Shore.

Chicago-based Exelon reached a $6.9 billion agreement this spring to acquire Pepco, but the deal must be approved by state regulators, including the Public Service Commission of Maryland. Donna Cooper, president of Pepco Region, said she expected the approvals to be completed in the second or third quarter of next year.

The acquisition isn't expect to affect operations for BGE. Pepco owns Potomac Electric Power, which serves D.C. and its Maryland suburbs, Delmarva Power & Light and Atlantic City Electric in New Jersey. Those utilities serve about 2 million customers.

Cooper said in a conference call with reporters Tuesday that the merger application includes no request for utility rate changes.

The merger will improve service for customers of Pepco utilities because they'll be able to draw on Exelon resources, including crews and equipment in storm responses, said Melissa Sherrod, Exelon's vice president for corporate affairs. For example, it ought to reduce both the frequency and duration of power failures, said Mike Maxwell, Pepco Holdings' vice president of asset management.

According to an analysis submitted to the Public Service Commission Tuesday by Susan F. Tierney, a Boston-based financial consultant, the merger would create nearly 7,200 new jobs, with a total economic impact of $623 million on the service areas. She wrote that the jobs would result in largely from spending of an infusion of $40 million into the Maryland economy planned next year through a Customer Investment Fund.

Money in the fund could be used as the PSC wants to provide bill credits, low-income assistance, energy efficiency programs and enhanced response to greater power demands, Christopher M. Crane, Exelon's president and CEO, said in testimony submitted to the PSC.

Exelon committed to about $50 million in charitable contributions spread over a decade in Pepco-served territories, exceeding Pepco's 2013 giving in each of those years. Pepco donated $623,000 in Maryland in 2013.

Exelon also committed to specific targets by 2020 for reducing the frequency and duration of power outages for both Potomac Electric and Delmarva. It offered to accept financial penalties if it misses those targets.

Hearings before the PSC will be scheduled, and requests to intervene in the case are due by Sept. 17.